CYPRUS: Lower VAT for home renovations to 5%

The government has lowered the value added tax (VAT) for repair and reconstruction work on residential units from the universal 19% to 5%, valid for all homes, including non-primary.

The Cabinet decided on Tuesday to issue a decree with immediate effect for the change, that was quickly praised by the employers’ federation (OEV), saying that “the construction sector and tens of other professional services and hundreds of businesses need support in order to release the vast dynamic that they have.”
“Such measures give impetus to business activity, enhance employment opportunity and speed up the return to normalcy,” OEV said.
President Nicos Anastasiades initially announced last week the government’s intention to lower VAT for the renovation of dwelling units, from 19% to 5%.
In his address to the 88th annual mmeeting of the Cyprus Chamber of Commerce and Industry (KEVE), the President said that the decision was taken following a proposal by the business community and upon the initiative of the Presidency, in cooperation with the Ministry of Finance.
The lower VAT will apply in renovations of all dwelling units, and not just in the case of primary residence, as was the case until now.
The President explained that vulnerable consumer groups and residents of remote communities will also benefit from lower VAT when repairing their homes, to upgrade their structural adequacy or to improve their energy efficiency.
In effect, this could also apply to buy-to-let properties or other investments.